If you’re the sort of person who bristles when Apple talk turns to the iPad and iPhone at the expense of the Mac, then you had best avert your eyes from Tuesday’s quarterly earnings announcements. Because when Apple tells the world how it performed during the three-month period ending in June, the iPad and iPhone 4 are likely to take center stage.
That’s because after a quiet March quarter on the product announcement front, Apple kept busy during its fiscal third quarter. The company released the iPad on April 3, just after the quarter began. And the iPhone 4 hit the streets in five countries on June 24, about a week before the quarter ended. Sure, there were other product releases in between—Apple rolled out updates to its MacBook Pro, MacBook, and Mac mini lines during the quarter—but when company executives speak to Wall Street analysts during a Tuesday afternoon conference call at 2 p.m. PT, look for most of the focus to fall on Apple’s handheld mobile devices. (As usual, Macworld will have live coverage of what Apple has to tell Wall Street.)
Considering that Apple set sales and profits records for a non-holiday quarter three months ago, expectations are high for the fiscal third quarter. When he spoke to analysts in April, Apple chief financial officer Peter Oppenheimer told Wall Street to expect sales ranging from $13 billion to $13.4 billion and earnings of $2.28 to $2.39 a share. (By comparison, Apple reported adjusted revenue of $9.7 billion and earnings per share of $2.01 in the 2009 third quarter.) But Apple’s estimates are notoriously conservative—thus, analysts are looking for $14.74 billion in sales and earnings per share of $3.10, according to the latest estimates.
What will drive those figures and, not coincidentally, be the focus of most of the conversation between Apple and the analysts tracking the company’s every move? Here are five issues to keep an eye on Tuesday afternoon.
• iPad sales: The just-completed quarter marks Apple’s first full month of iPad sales, and analysts will be eager to see how the market has received the tablet. (Pretty well, if the numbers Apple has released so far are anything to go by—the company says it sold 3 million iPads in the device’s first 80 days on the market.) Analysts are going to want to know if that kind of growth can continue, especially with Apple planning to introduce its tablet to nine more countries by the end of this month.
• iPhone 4 numbers: Apple will only have a week’s worth of sales to report for the third quarter, but that won’t stop the company from talking up the success of its latest smartphone. Last Friday, Apple noted that it has sold 3 million iPhone 4s, and that the white model will soon join the party. Apple also plans to bring the phone to 17 more countries this month. It’s probable that Apple executives will have more to say on this subject.
• The iPhone 4’s antenna: Come on—you didn’t think Steve Jobs was going to get the last word on this subject with Friday’s press conference, did you? It’s a near certainty that analysts will explore the ramifications of Friday’s announcements—that Apple acknowledges a small percentage of iPhone users are reporting problems with the iPhone 4’s signal strength and that the company is offering free cases as a fix for all users—on the company’s bottom line. Analysts will be particularly keen to get Apple executives to comment on whether last week’s news—particularly Consumer Reports’ iPhone 4 criticisms—are having any impact on sales. (Remember, Consumer Reports said it would not recommend the iPhone a week ago—a few weeks after the fiscal third quarter ended for Apple.) Apple executives on the conference call will likely be just as keen not to answer that question.
• Don’t forget the Mac: It would be easy to overlook the Mac in all of this mobile device madness, but with three product launches during the quarter, it’d be a mistake. Pay particular attention to how the new laptop and Mac mini offerings impacted sales. Apple sold 2.94 million Macs in the second quarter, an impressive figure that helped drive that quarter’s record performance. It will be interesting to see if the Mac segment can make a similar impact this quarter, starting with whether it can improve upon the 2.6 million Macs Apple sold during the third quarter of 2009.
• China: Apple opened a retail outlet in Shanghai a little more than a week ago. It was the second Apple Store to open in China, and it could soon be joined by a third outlet in Hong Kong. It’s all part of Apple’s plans to step up its retail presence in China; the company has previously outlined plans to open 25 retail stores in China by the end of 2011. Apple executives will likely update analysts on those plans. And the company might also talk about the iPhone’s presence in China, as reports circulate that Apple is getting closer to adding Wi-Fi to phones sold in that market.
Because on Tuesday, it all comes back to Apple’s mobile devices.